A Sharia-compliant joint venture where partners contribute capital and share profits by agreement and losses in proportion to capital; a diminishing musharaka is often used for property finance.
Related terms
- Non-recourse loan
A loan secured only by the property itself, so the lender's remedy on default is limited to seizing the asset; rarer and more expensive in emerging markets whe…
- Preferred equity
Equity that sits senior to common equity in the capital stack, receiving a fixed return and priority on distributions before common holders, but subordinate to…
- Recourse loan
A loan where the lender can pursue the borrower's other assets or guarantors beyond the pledged property if the collateral does not cover the debt — the norm f…
- Refinancing
Replacing existing debt with a new loan, often to release equity or lower cost.
- Senior debt
The first-ranking loan with priority claim on cash flows and collateral.
- Subscription line
A short-term revolving credit facility secured against LPs' undrawn commitments, used to fund deals quickly and defer capital calls; it can flatter reported IR…
- Sukuk
Sharia-compliant certificates representing fractional ownership in an underlying asset or project and paying returns from its income rather than interest; a ma…
- Takaful
Sharia-compliant cooperative insurance where participants pool contributions to cover each other's losses, avoiding the interest and uncertainty of conventiona…